Chapter 3

Personnel Planning and

Forecasting
Prepared by:
Roshan Kumar
Background

► Traditional Recruitment and Selection Process:

❖ Decide what positions to fill
❖ Build a pool of candidates for these jobs
❖ Have candidates complete application forms
❖ Use selection tools
❖ Decide to whom to make an offer
► Ideally:
❖ Starts with workforce/ personnel planning and forecasting
Human Resource Planning

❖ Process of defining what positions the firm will have to fill

and how to fill them.
❖ A process of determining HR needs of the organization in
the context of its strategic planning.
❖ Closely aligned with the HR strategy of the organization.
❖ Ensures the best fit between employees and jobs while
avoiding manpower shortages or surpluses.
HRP Process

Forecast Forecast Identify Develop

Personnel supply of demand-su action plan
needs candidates pply gaps to fill
(Labour projected
demand) gaps
Characteristics of HRP

► Goal directed
► Future oriented
► Qualitative and Quantitative
► Systems-oriented
► Time horizon
► Part of Corporate plan
► Part of Acquisition function
Objectives of HRP

To ensure optimum use of existing HR.

To forecast future requirement for HR.
To provide control measures to ensure that necessary HR
are available as and when required.
To asses the surplus and shortage of HR.
To determine the level of Recruitment and Training.
To meet the needs of expansion and diversification
programs.
Importance of HRP

► Uncertainty reduction
► Objective focused
► Environmental adaptation
► Acquisition of Human resources
► Utilization of Human resources
► Development of Human resources
► Control of Human resources
► Improved labour relations
Forecasting Personnel Needs (Labour
Demand)

► The process of estimating the future quantity and quality of people required.
► The basis of forecast will be annual budget and long term corporate plans.
► Demand forecasting must consider several factors:
► Internal (Budget constraints, employee separations, production
level)
► External (Competition, laws, change in technology)
Tools for projecting personnel needs

► Trend Analysis -understanding demand trends

► Ratio Analysis –forecasting using ratio
► Scatter Plot –graphical relation between two variables
► Transition Analysis/ Markov Analysis –mathematical process
► Computerized Personnel Forecasting : HRIS

► HRIS is a database system that keeps important information about employees in

a central and accessible location.
► The information provided by HRIS can help the organization to gain competitive
advantage.
Forecasting Supply
► Estimate likely supply of both inside and outside candidates

► Inside: which current employee might be qualified

► Qualification(or skills) inventory : Manual or computerized
► Personnel replacement charts
► Position replacement charts

► Outside: if inside candidates are not enough for probable openings then we
need to turn outside.
► Managers observation
► Formal labor market analysis
SUCCESSION
PLANNING
Succession Planning
► A process for identifying and developing new leaders who can replace old
leaders when they leave, retire or die.
► It increases the availability of experienced and capable employees that are
prepared to assume these roles as they become available.
► Replacement planning for key roles is the heart of succession planning.
► In dictatorships, succession planning aims for continuity of leadership,
preventing a chaotic power struggle by preventing a power vacuum.
► In monarchies, succession is usually settled by the order of succession.
► In business, succession planning entails developing internal people with the
potential to fill key business leadership positions in the company.
Succession Planning: How?

► Identify those with the potential to assume greater responsibility in the

organization
► Provide critical development experiences to those that can move into key
roles
► Engage the leadership in supporting the development of high-potential
leaders
► Build a database that can be used to make better staffing decisions for key
jobs